Plant of the Year for 2008

Standing left to right: Tom Potts, plant manager; Don Adkison, materials manager; Matt Hamilton, continuous improvement manager and Bobby Riley, HR manager. Kneeling left to right: Derrick McCartney, maintenance supervisor; Chuck Harkins, production manager and Ben Roe, engineering manager

“Given the powerful forces of global competition, it takes a strong management team, committed employees and a dedication to quality and innovation for a U.S.-based manufacturer to stay on top,” says John Engler, president of the National Association of Manufacturers (NAM). “Baldor obviously demonstrates these qualities and to the satisfaction of their customers, which, in the end, determines whether you succeed or fail.”

Baldor’s success is due in no small part to the actions of the maintenance, engineering and facility management personnel in its 25 manufacturing plants and, in this respect, one plant stands out: Baldor's Ozark Plant.

 “Too many companies think all you need to compete and survive is to reduce costs, eliminate waste and be more efficient, but there are other factors involved,” says Mike Collins, president of MPC Management and author of the book “Saving American Manufacturing.” Baldor’s customer focus and holistic drive for value throughout the organization sets them apart from other organizations.

 “Baldor is proof that you can manufacture in American with American workers, export to the rest of the world, get a premium price for a premium product, and compete with any low-cost country in the world — even with a commodity product like electric motors,” he adds.

The Baldor value philosophy

Baldor aims to be the largest and best industrial electric motor manufacturer in the $18 billion global motor market, but not by selling the cheapest motor one can buy. Its strategy is to deliver the highest-value product by improving quality and service, reducing the cost of ownership and shortening the time to deliver products to the customer.

“Our mission is to be the best as perceived by our customers; to be the highest value provider to our customers,” says Randy Waltman, Baldor’s executive vice president of operations.

To achieve this mission, all eyes remain trained on the customer — from the executive office to the plant floor. “Our founders always said, ‘We don’t watch our competitors. We listen to our customers,’” Potts explains.

Raised in the Ozarks

Baldor Ozark Plant’s customer focus and leadership in value-driven processes distinguish it from the competition.

In 1994, a 15-acre tract in a small town in Franklin County, Ark. was selected for a new Baldor motor plant. Ozark’s population of 3,600 welcomed the jobs and economic opportunity the new 60,000-sq.-ft. facility offered.

Today, the Baldor plant in Ozark, Ark., measures 151,800 sq. ft. and is capable of producing 15 hp to 75 hp NEMA premium 210, 250 and 280 electric motors. With 265 employees, it’s the largest employer in Ozark and second largest in Franklin County.

The plant is the market leader in the motors it manufactures and has the shortest lead times in the industry. “Ozark has the highest degree of automation within Baldor Electric Co. and it’s one of the most efficient plants we have today,” says Tom Potts, Baldor Ozark plant manager.

In recent years, the plant has taken a leadership role in transforming its manufacturing, maintenance, training and conservation strategies, making it more efficient, effective and competitive than ever. Its actions serve as a model for any manufacturer seeking to strengthen its competitive position.

About 120,000 units are manufactured annually at the plant, of which 45% are custom designs. “We have more than 10,000 active product designs at Ozark now,” Potts says. The products are sold to OEMs and distributors worldwide in diverse markets such as HVAC, food processing, mining, material handling and energy.

Designed for instant gratification

Wound stators in housings ready to load to assembly. Note the variety and small lot sizes.

“Ozark was initially laid out with multitask work cells,” says Ryan Waite, Baldor’s director of Lean FlexFlow and former Ozark plant manager. “Within the cells, we marry up machine-dependent processes so that a person’s time is optimized during the cycle time of the machine. In the end, it means that multiple machines are being run by one operator. As we expand, add new capital equipment and undergo product transitions, we always try to maintain the work cells.”

The Ozark plant also was built with FlexFlow in mind. FlexFlow is Baldor’s best-practice manufacturing scheduling system that manages widely varying product order volumes, cycle times and changing priorities with minimal work-in-process (WIP) inventory. The finely orchestrated scheduling allows a variety of products to be produced in a short time frame.

“This is an instant-gratification society and people expect you to provide what they want when they want it,” Potts says. “We don’t discourage one-piece orders, special engineering or rush jobs. The ‘push-ins’ bring us closer to the customer. We can turn over emergency orders better than anyone else because of FlexFlow.”

Connected for corporate visibility

The Stator Lean Cell connecting station operator accesses the connecting diagram from the Shop Floor Display. Zoom capabilities allow detailed views.

In 1999, Baldor deployed a corporate information system to replace five outdated systems that didn’t communicate with each other. The SAP ERP-based Baldor Unified System (BUS) provides a consolidated, common platform that allows corporate, customer, inventory, engineering and other core information to be viewed and managed centrally, and the company to operate as a cohesive, more efficient unit.

In 2006, the Baldor Shop Floor Display system extended BUS to the shop floor, providing access to the latest work orders, schedules, process instructions, material lists, quality alerts, diagrams and other critical information.

“Ozark was one of first facilities to get the Shop Floor Display,” Potts says. “The old system would print work orders and the paper was taken to the shop floor. Now the Shop Floor Display terminal at each workstation shows operators what work to do, what to order and any special instructions or critical parameters.”

The system is an effective two-way communication vehicle. “Anyone can enter a work order to report equipment downtime or safety issues and it goes right to maintenance,” Waite says. Anyone can enter a ‘Value Hunt’ to suggest process improvements and it goes directly to engineering.”

Along with communications, the system has helped streamline the manufacturing environment. “Since we added the Shop Floor Display, we use less paper and have fewer copiers,” adds Ben Roe, Baldor Ozark’s engineering manager. “There are almost no books on the floor. This helps with ISO compliance.”

Defining new Best Practices

The 2007 acquisition of Reliance Electric and affiliated companies added new products and markets, as well as fresh business practices. Baldor quickly began looking at combining the best of its manufacturing organizations.

A series of Best Practice Tours were conducted in which plant and engineering managers and supervisors toured three or four other facilities. Each plant put its best foot forward in demonstrating projects implemented, improvements made and associated gains. Best practices from Reliance and Baldor were selected and integration plans were drawn.

“Baldor has a world-class FlexFlow manufacturing system and Reliance has world-class Power Lean and Power Maintenance programs. Merging these best practices together is really powerful,” Waltman says.

The Ozark plant took a three-pronged approach. “The three legs are Lean, maintenance and training,” explains Scott Fullbright, Baldor’s director of motor operations. “You can’t do Lean without maintenance and vice versa, and can’t do either without training. The Ozark plant grasped this concept quicker than the other plants and took off with all three processes at the same time.”

Re-tailored training

Operator Trenna McEntyre’s Value Hunt resulted in an orange tool holder being connected to the conveyor in the Stator Lean Cell lacer station. Now the frequently-used tools remain at her fingertips.

Lean and maintenance principles can’t be applied effectively without training that stresses consistency in process. To lead the way, the plant’s first-ever full-time training manager position was instituted.

“The Ozark plant had been scratching the surface with Lean principles and tools for some time,” Waite says. “We began adopting the Reliance programs in 2007, starting with the Lean training program.” This included Lean Champions training for senior management and Lean Masters classes on topics such as 5S, safety, preventive maintenance, setup reduction and quality at the source.

Maintenance training also was targeted. “We reevaluated our maintenance training because good, technically-qualified maintenance people are the hardest to find. We needed to spend money to develop the basic aptitude and then grow them up within the organization,” Potts explains.

Employee-specific classes such as lockout/tagout, blueprint reading, downtime, safety, productivity and turnover were revamped, as was the new employee orientation. Cross-training occurred because Lean would allow employees to be floated to other work areas.

Arkansas Tech University-Ozark remains a ready source of labor, and some employee training has been conducted there as well. “Baldor Ozark has a close working relationship with the program director at the campus. We make contributions in different forms, make our facility available to them to bring students out for tours, and offer opportunities for some of their students to form an internship with our maintenance department,” Waite says.

Engineering made lean and flexible

Operator-designed shadow boards help manage tools used in the work area.

Power Lean, a Reliance best practice, is designed to take out of the manufacturing process anything that doesn’t add value to the customer. It eliminates bottlenecks, errors, waste and costs while improving overall quality. Add to that Baldor’s FlexFlow and you have manufacturing speed and agility.

“During the past several months, as we have driven toward one-piece flow value streams, we enhanced FlexFlow with the Lean manufacturing principles,” Waite says. To supplement the effort, a dedicated continuous improvement manager position was established.

The first step is Value Stream Mapping, where current-state work cell value streams are benchmarked, production demands are evaluated, and ideal future states are mapped. The new maps compress the work area to free up space and change the process layout to allow more efficient movement and reduce WIP inventory.

“The big focus of our projects is first to reduce WIP inventory, and second to reduce the throughput time through the value stream,” says Waite. “In the process, as waste is removed, labor is freed up and those people can begin staffing another line.”

Ozark has so far completed a stator assembly value stream and two rotor assembly value streams, and additional projects are planned. Since March 2008, the combined savings of the three completed value streams has been significant:

• Total labor reduction within the value streams = 15%
• Combined WIP inventory reduction = 59%
• Average throughput time reduction = 73%
• Reduction of distance that components travel = 76%
• Reduction of floor space consumed = 42%

The plant eliminated 1 to 1.5 days of work from the manufacturing process in these areas and gained 7,000 sq. ft. of open floor space. At one time there was six weeks of inventory on site. Now, the plant averages 1.2 weeks of inventory. Originally there were 33 people in the department and now there are 26 - the rest were freed up for other jobs.

“The idea is to reduce waste incrementally but at the same time reduce it significantly. It’s not done at the snap of the fingers,” Waite adds. “How you apply the principles is unique to every facility and every process. There will be projects ongoing at Ozark because the whole premise of this initiative is continuous improvement.”

Pott’s ultimate objective is to compact the manufacturing area throughout the plant by 30% to grow production without adding “bricks and mortar,” thus avoiding the high cost of construction, heating and cooling. Automation is another goal. In the stator work cell, a recently-acquired winding machine soon will take the manual work out of the phase insulation process.

“With benefit of value stream principles in the work cells, in the past six months we’ve been gaining capacity, which hopefully will reduce the need to buy new capital equipment,” Waite says. “The largest benefit is preparing for future growth, and we should be able to manage growth with almost the exact same workforce.”

Lean FlexFlow also improves quality management. “With the one-piece flow value stream, when you reduce WIP you see your defects immediately, giving you the opportunity to fix them immediately,” Waite explains.

Lean FlexFlow differentiates Baldor from its competitors. “China in particular has a hard time fulfilling emergency orders, and the cost of shipping and energy is worse there, too,” Potts says. “For as many customers as we lose to China, even more come back. Once they find they can’t change designs quickly or get their products in a timely manner, or that warranty and support service is impossible, they begin to rediscover our value.”

Maintenance is proactive

Plant Manager Tom Potts poses with posted work cell metrics.

When processes are lean, uptime is critical. The objective of Power Maintenance, the other best practice from Reliance, is to increase reliability and reduce unplanned downtime by moving from reactive maintenance to a preventive and predictive approach. To administer Power Maintenance at Ozark, a dedicated maintenance manager position was created.

In March 2008, a maintenance assessment was conducted at Ozark that measured the state of communications, training, uptime, preventive maintenance, predictive maintenance, 5s in the shop area, planning, scheduling and more.

“Our first maintenance assessment score was 487 out of 1,000,” says Derrick McCartney, Baldor Ozark’s maintenance supervisor. “We heard this was pretty good for it being our first time implementing Power Maintenance. Only one other Baldor plant scored higher their first try.” A master plan was developed to improve the score and formalize maintenance.

Ozark’s initial objective is to increase the mean time between failures (MTBF) and decrease the mean time to repair (MTTR). Improving those two measures will improve overall uptime. “The goal is 95% uptime for each work cell as a whole,” McCartney says. “If one machine is down, the entire cell is down. Eventually, we want 98% uptime.”

To increase MTBF, PM routines are being documented and continuously improved, and resources have been dedicated to perform preventive maintenance. “If you’ve got the same people doing preventive maintenance that do breakdown maintenance, they tend to do all breakdown maintenance,” says Fulbright. “There’s always something more important to do than preventive maintenance.”

To decrease MTTR, the maintenance technicians’ skills are being upgraded and maintenance inventory control is being improved. Vendor reviews and negotiations are underway to reduce long parts lead times.

Ozark has begun benchmarking the current state of machinery and evaluating conditioning monitoring technologies to better predict deteriorating conditions.

Technologies currently being evaluated are airborne ultrasonic testing, ball bar analysis, thermal imaging for electrical cabinet hot spots, and oil filtration systems.

Initial benefits from Power Maintenance are already being realized. Downtime and priorities are now coordinated with the operations staff and, unless safety is an issue, most work is scheduled for the weekend. Maintenance work is better planned, allowing more efficient use of time. Improved data capture is enhancing the ability to drill down several layers to the root cause of failures.

“Maintenance started rough. We were firefighters at first,” McCartney says. “With Lean and Power Maintenance, we began doing more planned and predictive work. Although we lost a few guys up front, the team is starting to see the change and recognizing in the long run it is making the job better.”

Fullbright adds, “The maintenance initiatives are going really well at Ozark and they are kind of exemplary of what we want all our Baldor plants to look like.”

Managed for sustainability

In the Phase Insulation Station for Large Motors, the operator currently inserts phase insulation by hand. This process will soon be automated with the new Baldor Winding System.

Ozark is aggressively applying Lean concepts at the facility level. “Conservation is a way of life for now on,” Potts says. “This year we were assessed a 20% energy surcharge from our local electricity provider. Consequently, we are always looking at our energy consumption and trying to find ways to trim that.”

Numerous conservation projects have already been completed at the plant (see sidebar, “Sustainability yields tangible results”). The Lean and maintenance initiatives also are generating savings. “All non-value-add activity takes energy,” Fullbright says. “Better-maintained equipment will run at peak operating efficiency and generate less waste. Cutting time and effort from a process will reduce waste. There are big ways to measure waste savings, but the intangible benefits often don’t show up until much later.”

Two projects are underway. “One is for a centralized computer-controlled thermostat system, which should reduce electricity consumption for cooling by 5% and natural gas consumption for heating by 5%. The other is for an air circulation system. The expected reduction of natural gas consumption for heating purposes is an additional 25%,” Waite says. Ozark also is testing an overhead door covering to reduce the variance between ambient and outside temperatures, and a 20%-30% improvement is projected.

“We’re proud of the work we’ve done with our Lean initiative and energy conservation, which supports our strategy to be a made-in-America manufacturer,” Waltman says.

“The U.S. leadership in energy efficiency and conservation often goes unappreciated, but this country’s manufacturers are doing incredible things to save energy for their customers and the consumers,” NMA’s Engler says. “Baldor sets the standard for this kind of energy excellence.”

The hunt never ends

The new 210 Frame Baldor Winding System will machine-insert phase insulation, eliminating a previously manual process.

Baldor’s long-standing Value Hunt program is a popular continuous improvement tool. It allows anyone at the plant to report problems and make suggestions. Once paper-based, Value Hunts are now processed in real time on the Shop Floor Display. Every request is answered, including personal explanations when changes aren’t implemented.

“Communication is essential to success — from the floor to the office,” says Matt Hamilton, Baldor Ozark continuous improvement manager. “The Value Hunt program changed how people think. Anyone can identify a problem and suggest solution, and be rewarded if it’s implemented.”

For example, Trenna McEntyre, a connecting cell operator, reported a problem in the stator Lean cell lacer station. She needed a place nearby to set down frequently used tools for cutting excess string and paper. Engineers used her Value Hunt to devise a tool block and attached it within easy reach to the conveyor.

 ”The Value Hunt provides our employees a way to communicate new ideas and corrections to our database. This keeps our employees interested and involved,” explains Roe.

When a Value Hunt solution is implemented, the originators get a Wal-Mart gift card. Gift cards also are awarded in monthly random drawings from all contributions.

“Value Hunt is our report card on how we’re doing,” Hamilton says. “If we perform well, the number of Value Hunts we receive will gradually decline.” The company generates about 250 Value Hunts per month, and an average of 35 to 40 of them has good solutions.

The human element is respected

Baldor’s egalitarian and motivational human resource policies also have been instrumental in inspiring continuous improvement. Twelve percent of pretax profits are contributed to profit sharing, allowing employees to reap the rewards of process improvements. A 401(k) and stock options provide added incentive to ensure customer satisfaction.

“The employees in our Ozark Plant support our strategy and understand the importance of taking care of customers. Job security comes from winning orders and taking good care of our customers,” Waltman says.

 “My honest opinion on what’s made this plant so successful for the past eight years is that it’s a tremendous group of people. That’s our biggest asset,” Waite adds.

It’s strategies like these, supported by each Baldor plant and Ozark in particular, that have kept Baldor the leader in the industrial electric motor business in North America, potentially No. 2 on a global basis in size, and well equipped to take on a greater share of the global motor market.

“I consider Baldor Electric Co. to be one of the ‘new stars of manufacturing’ because its strategies not only allow it to compete in a global market, but also to manufacture successfully in the U.S.,” Collins says. “The stars know that the manufacturing industry is vital to the U.S. economy. Organizations like Baldor Ozark Plant are helping to ensure it’s not a vanishing sector. They really deserve the Plant of the Year award.”

 NAM agrees. “Companies like Baldor are the true strength of the U.S. economy and they do not happen by accident,” Engler adds. “John McFarland and all the management team and employees of Baldor Ozark Plant deserve credit for this richly deserved honor.”

E-mail Contributing Editor Sheila Kennedy, managing director of Additive Communications, at [email protected].

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